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Oil

Oil Rebounds on Hopes OPEC+ Members Extend Voluntary Cuts

SECTOR COMMENTARY:

The energy sector is set for a lower start, pressured by weakness in the major equity futures which are lower as Wall Street appears to lose steam.

WTI and Brent crude oil are rebounding this morning on hopes OPEC+ members may extend voluntary cuts and as fighting resumes in the Middle East. Traders and analysts do not expect the latest production cuts will have an impact on oil prices,  unless there is further tightening in supply. Yesterday, Saudi’s energy minister said production cuts can "absolutely" continue past 1Q24 if needed. Also adding to supply concerns, Israel widened its war against Hamas to Gaza’s south and traders continue to analyze the effects of the latest attack on commercials vessels in the Red Sea. The US Department of Treasury yesterday said no decision has been made on reimposing oil-related sanctions on Venezuela after a referendum to annex the Essequibo region of Guyana was passed by Venezuela on Sunday.

Natural gas futures are recovering yesterday’s losses as forecasts have the vast majority of the L48 experiencing above-normal temperatures in the next two weeks.

BY SECTOR:

US INTEGRATEDS

No significant news.

INTERNATIONAL INTEGRATEDS 

According to Reuters, BP started drilling production well at new platform at AZERI-CHIRAG-GUNASHLI project in Azerbaijan.

Repsol said it has started supplying sustainable aviation fuel (SAF) to U.S.-based airline Atlas Air, which ships freight for Zara-owner Inditex to and from Zaragoza airport in northern Spain. Atlas Air has been using SAF for 5% of fuel on all its flights from Zaragoza since November and is the first cargo airline to use green jet fuel regularly in Spain, Repsol and the airline said in a joint statement. Regulators in Europe and the United States are pushing for the use of sustainable aviation fuel, made out of organic waste such as used cooking oil, as it is one of the only ways to decarbonise air travel. However, the supply and cost of SAF limit its use in commercial air transport.

On the occasion of the "Eliminating Methane Emissions by 2030" roundtable partnered by the COP28 Presidency, TotalEnergies announced the signing of three cooperation agreements with National Oil & Gas Companies (Petrobras in Brazil, SOCAR in Azerbaijan and Sonangol in Angola) to carry out methane detection and measurement campaigns using the AUSEA technology on oil and gas facilities in Brazil, Azerbaijan, and Angola. These agreements demonstrate the commitment of TotalEnergies and partnering National Oil & Gas companies to identify, quantify and reduce methane emissions and to encourage the entire oil and gas industry to aim for Zero Methane Emission by 2030.

CANADIAN INTEGRATEDS

No significant news.

U.S. E&PS

Crescent Energy announced, subject to market conditions, its indirect subsidiary Crescent Energy Finance LLC intends to offer for sale in a private placement pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended, to eligible purchasers $150 million aggregate principal amount of 9.250% Senior Notes due 2028. The Notes are being offered as additional notes under the indenture dated as of February 1, 2023, as previously supplemented (the “Indenture”), pursuant to which the Issuer has previously issued $850 million aggregate principal amount of 9.250% Senior Notes due 2028.

Raymond James initiated coverage of Crescent Energy with Strong Buy rating and a $16 price target.

CANADIAN E&PS

No significant news.

OILFIELD SERVICES

H.C. Wainwright initiated coverage of Newpark Resources with Buy rating and a $12 price target.

DRILLERS

No significant news.

REFINERS

According to Reuters, Marathon Petroleum reported compressor malfunction at Carson, California refinery.

MLPS & PIPELINES

Kinder Morgan announced its preliminary 2024 financial projections. A summary of KMI’s expectations for 2024: Generate $1.21 of net income attributable to KMI per share, up 11% versus our current 2023 forecast of $1.09. Generate $2.21 DCF per share, up 5% from the current forecast for 2023. Generate $8.0 billion of Adjusted EBITDA, up 5% from the 2023 forecast. Invest $2.3 billion in discretionary capital expenditures including expansion projects and contributions to joint ventures. Return additional value to shareholders in 2024 through an anticipated $1.15 per share dividend (annualized). End 2024 with a Net Debt-to-Adjusted EBITDA ratio of 3.8 times, well below our long-term target of approximately 4.5 times. The expected $2.21 of DCF per share and the 3.8 times leverage metric do not reflect the impact of possible opportunistic share repurchases, which KMI will have substantial capacity to transact on. The guidance does not include the acquisition of NextEra Energy Partners’ STX Midstream assets. KMI has filed for approval pursuant to Hart-Scott-Rodino and expects to close in the first quarter of 2024.

A storage vessel for Mexico's first liquefied natural gas (LNG) plant departed U.S. waters for Altamira, Mexico, according to ship tracking data, putting the offshore project on track to soon inaugurate exports. LNG developer New Fortress Energy last week said its 1.4-million-metric-tons-per-year Altamira floating LNG project had begun processing gas. The company earlier this year had postponed the inauguration amid delays in receiving the infrastructure. "We're excited to announce that we've achieved first gas for our Fast LNG 1 unit, a major milestone for our project and the world of LNG," the company said on social media.

MARKET COMMENTARY

U.S. stock index futures signal potential Wall Street losses as investors await key data this week, including the jobs report, to assess the likelihood of an early Fed rate cut. European shares remain subdued, with gains in energy balancing declines in mining and healthcare. Japan's Nikkei experienced its sharpest drop in about six weeks, driven by a decline in chip stocks. The dollar regained some ground, putting downward pressure on gold. Heightened uncertainties surrounding OPEC+ output cuts, Middle East tensions, and positive economic signals from Europe contributed to higher oil prices. Later in the day, data on services PMIs and job openings are scheduled for release.


Nasdaq Advisory Services Energy Team  is part of  Nasdaq's Advisory Services – the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact  Rich Pontillo.


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Nasdaq Energy News

Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts.

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